Ipsofactoj.com: International Cases [2005] Part 5 Case 13 [HCHK]


HIGH COURT OF HONG KONG SAR

Coram

PCCW-HKT Telephone Ltd

- vs -

The Telecommunications Authority

HARTMANN J

30 JUNE 2004


Judgment

Hartmann J

INTRODUCTION

  1. The applicant is the holder of a fixed telecommunications network services licence (an 'FTNS licence'). The licence permits it to establish and maintain a telecommunications network so that it may provide its customers with telecommunications services. The licence was granted to the applicant in June 1995 at a time when extensive liberalisation of the Hong Kong telecommunications market was taking place. The licence has been issued to the applicant under the Telecommunications Ordinance, Cap.106 ('the Ordinance').

  2. There are a number of holders of FTNS licences. One of that number is a company called Wharf T&T Ltd ('Wharf').

  3. It speaks for itself that customers of one licensed network service must be able to communicate with customers of other licensed services. To this end, FTNS licences direct that licence holders must give other licence holders access to their facilities by a process described as 'interconnection'. In this regard, the applicant's licence (general condition 13.1) states that the applicant shall:

    .... interconnect the Service and the Network with .... other fixed telecommunications networks and services licensed under the Ordinance ....

  4. In Hong Kong at this time there are two different types of interconnection. More will be said later of their fundamental characteristics. At this juncture, it suffices to say that the two different types are known as 'type I' and 'type II', the latter sometimes being called 'broadband type II'. These proceedings are concerned solely with what I will call broadband type II interconnection.

  5. The respondent ('the Authority') is the chief regulatory authority for telecommunications in Hong Kong. He is appointed to his office by the Chief Executive in terms of the Ordinance. His powers derive from the Ordinance.

  6. In or about the end of 2001 and early 2002 the applicant and Wharf entered into discussions in terms of which Wharf would obtain broadband type II interconnection with the applicant's network. Apparently, physical interconnection presented no insuperable difficulty. The difficulty was one of agreeing terms and conditions.

  7. The applicant was prepared to effect interconnection on the basis that its remuneration would be in accordance with its published tariff (approved by the Authority) for what it calls its Broadband Copper Local Loop (BCLL) services. Wharf, it seems, sought terms and conditions which it considered more favourable. Wharf was prepared to accept the BCLL tariff but only on condition that the charges would be interim charges dependent on the outcome of a determination as to equitable terms and conditions made by the Authority pursuant to s.36A of the Ordinance and an agreement that, in consequence of that determination, any excess payments would be refunded to it.

  8. Deadlock ensued. Wharf then sought a determination of appropriate terms and conditions by the Director pursuant to s.36A of the Ordinance and, pending that determination, a direction made by the Authority pursuant to s.36B of the Ordinance that physical interconnection must in any event be put into effect.

  9. In ensuing correspondence, the question of what interim terms and conditions should govern any interconnection was debated by the applicant and the Authority. Terms and conditions, I understand, cover a broad range of matters which include technical as well as financial matters. As such, they may be of utmost materiality, certainly when two competing commercial enterprises are involved. In a letter dated 29 April 2002, written on behalf of the Authority and addressed to the applicant's solicitors, the following was said in respect of the need to ensure the setting of at least interim terms and conditions:

    With regard to mandating such interconnection, one of the actions that the [Authority] considers necessary to direct [the applicant] to take is to implement the Broadband Type II interconnection 'in accordance with the Interim Terms'. The 'Interim Terms' are necessary for stipulating the detailed interim arrangements to achieve an effective interconnection, in the absence of which the interconnection would be rendered impracticable or infeasible.

  10. On 15 May 2002, the Authority issued a direction ('the May 2002 direction') requiring the applicant to implement broadband type II interconnection with Wharf. The direction was made pursuant to one section of the Ordinance only; namely, s.36B(1)(a)(iii). In terms of that section the Authority may require a licence holder to take action:

    .... to secure the connection of any telecommunications service being the subject of its licence to

    (A)

    any other telecommunications service being the subject of a licence granted under this Ordinance ....

    [my emphasis]

  11. When the May 2002 direction was made, the Authority chose not to impose any terms and conditions. In this regard, in a covering letter to the direction, the following was said:

    As regards the interim arrangements, however, the [Authority] has reconsidered this issue after considering the representations of the parties. Not only has [the applicant] objected to the 'Interim Terms' referred to in the draft direction, but [Wharf] has also reiterated that the 'Interim Terms' (a majority of which are based on the BCLL Tariff) are harsh and anti-competitive. Moreover, the parties have not agreed the solution proposed by the [Authority] on the three disputed terms.

    In the light of the views expressed by the parties, the [Authority] has decided not to impose the Interim Terms because the purpose of facilitating immediate broadband Type II interconnection can be achieved without the imposition of such terms. However, I must emphasise that the reason that the 'Interim Terms' are not necessary is not because of the publication of the BCLL Tariff as [Wharf] is entitled to decline to accept the BCLL Tariff and to seek [Authority's] determination. Rather, the [Authority] considers that to give effect to the direction, the parties do not require the terms and conditions to be specified in advance, given the existence of the Code of Practice and Technical Specifications concerning broadband Type II interconnection. Furthermore, the terms and conditions finally decided in the determination proceedings are capable of being retrospectively applied to govern the interconnection.

  12. This elicited a strong response from the applicant's solicitors who, in a letter dated 24 May 2002, wrote:

    .... in the event your office does have jurisdiction to issue such a direction, the content of the direction is itself of great concern to our clients as it is totally unclear to our clients on what basis the interconnection you have purported to direct is to proceed. Our clients reject the suggestion that the interconnection can proceed without terms. Indeed, this is a point that you made in your letter of 29th April 2002 when you recognised that

    .... Terms are necessary for stipulating the detailed interim arrangements to achieve an effective interconnection, in the absence of which the interconnection would be rendered impracticable or infeasible.

    In short, we take the view that even in the event you are exercising a valid jurisdiction (which we dispute), you have done so in an arbitrary and patently unreasonable fashion.

  13. It is the lawfulness of the May 2002 direction made pursuant to s.36B(1)(a)(iii) which is challenged by the applicant. Through its leading counsel, Mr. David Pannick QC, the applicant advanced the following two reasons why it contended that the Authority had no power to make the May 2002 direction or to make it in the form that he did:

    1. That properly construed, s.36B(1)(a)(iii) of the Ordinance does not extend to broadband type II interconnection. This is because the section is restricted to the interconnection of two 'services' and, while type II interconnection may properly be said to be the interconnection of one licencee's equipment or part of its system to another's, it cannot properly be said to constitute the interconnection of two 'services'. Accordingly, the Authority had no power to issue a direction purporting to compel the applicant to grant Wharf that form of interconnection.

    2. But, even if, contrary to (i) above, the Authority was acting within his powers by requiring a broadband type II interconnection, a s.36B direction must specify (either expressly or by reference to some pre-existing standard) the terms and conditions upon which interconnection is to take place. No such terms or conditions were specified. The direction was therefore ultra vires or irrational or constituted an abuse of power.

    A BRIEF HISTORY OF THESE PROCEEDINGS

  14. On 14 August 2002, the applicant filed its notice of application for leave to apply for judicial review (its form 86A), challenging the lawfulness of the May 2002 direction. It is not disputed that, pursuant O.53, r.4 of the Rules of the High Court, the application for leave was made promptly and in event within three months from the date when the grounds for the application first arose.

  15. However, as negotiations were taking place between various interested parties at that time and as certain appeal proceedings were in progress, it was agreed that the application for leave should be adjourned sine die. On 22 August 2002, I made a consent order to that effect.

  16. More than a year later, by letter dated 17 November 2003, the applicant informed the Authority that it now felt compelled to proceed with its application for leave to apply for judicial review but would do so on an amended basis. The amended application introduced the first ground described in paragraph 7 of this judgment; namely, that, properly construed, s.36B(1)(a)(iii) of the Ordinance does not extend to broadband type II interconnection.

  17. The Authority opposed both the application to amend and the application for leave. However, at a directions hearing which took place before me on 10 December 2003 it was agreed that all issues in dispute would (for purposes of more efficient case management) be argued in one hearing. In the result, the following three matters have fallen for determination in this judgment:

    1. the application by the applicant to amend its grounds for judicial review;

    2. the application by the applicant for leave to apply for judicial review, and, if that leave is given,

    3. the substantive application itself.

    THE APPLICATION TO AMEND

  18. In its letter of 17 November 2003, the applicant's solicitors informed the Department of Justice, representing the Authority, that, if the Authority was not prepared to withdraw the May 2002 direction, the applicant would proceed with its application for judicial review, the application to include the new issue of whether, properly construed, s.36B(1)(a)(iii) of the Ordinance vested power in the Authority to direct a broadband type II interconnection. Three days later, the applicant's solicitors supplied the Department of Justice with its amended grounds of application containing what I will call the 36B issue.

  19. The Department of Justice replied to the effect that the Authority was not prepared to withdraw the May 2002 direction and would oppose any application to amend.

  20. With the battle lines thus draw, a formal application to amend its grounds of application for judicial review was made by the applicant in its summons of 1 December 2003.

  21. In support of the application to amend, Mr. Pannick submitted that the issue of whether the Authority is given the power in terms of s.36B(1)(a)(iii) to direct that a FTNS licence holder must secure a broadband type II interconnection is an issue of fundamental importance, one that, if not determined in these proceedings, will undoubtedly have to be determined in the not too distant future. In short, the issue was not going to go away.

  22. Mr. Pannick emphasised that the issue was not only of importance to the parties and to holders of FTNS licences but, for self-evident reasons, was one of concern to the community. In such circumstances, he suggested that this Court should be slow to refuse the application to amend. Mr. Pannick found support for his contention in the case of R v Secretary of State for the Home Department, ex parte Ruddock [1987] 1 WLR 1482, in which Taylor J condoned the late filing of an application for judicial review, on the basis that, although unsupported by pressing reasons for the delay itself, it nevertheless raised matters of general importance. The judgment reads (at 1485G):

    I have seriously considered what effect I should give to this further delay. I am unimpressed by the reasons for it. But I have concluded that since the matters raised are of general importance, it would be a wrong exercise of my discretion to reject the application on grounds of delay, thereby leaving the substantive issues unresolved.

  23. I have concluded that there is substance in Mr. Pannick's submission that the issue is one of importance, looking, as it does, to how the Authority will in future be able to exercise his statutory powers. In addition, I accept that, if not determined in these proceedings, the issue may well in the not too distant future find its way back to the courts. It is notorious, I believe, that the Hong Kong telecommunications industry is going through a period of profound change. Competition is fierce, profit margins decreasing, all leading to a keen desire to ensure self-interest. The sooner a fundamental question of this kind is clarified the better the public interest is served.

  24. In further support of his application, Mr. Pannick said that the applicant's contention that the Authority's mandatory powers under s.36B(1)(a)(iii) did not extend to broadband type II interconnection should be recognised as being well-founded in law; worthy, that is, of full ventilation by way of argument.

  25. As to the question of prejudice, Mr. Pannick said that there was none, certainly no prejudice of a practical kind. Wharf, the interested party, had been made aware of the application to amend, he said, but had chosen not to raise any objection. As for the Authority himself, it was not and could not be suggested that if the new ground had been contained in the original Form 86A that he (or Wharf) may have acted differently. Nor was it suggested that the Authority had in any way been taken by surprise by the application.

  26. As to the issue of the notice of application being raised late in the day - some 14 months after the filing of the original application - Mr. Pannick emphasised that a delay in seeking an amendment to an application promptly made is to judged differently from a delay in making the application itself. In this he must be correct. There are sound reasons for insisting that challenges to the decisions of public authorities be brought promptly. Good administration, which requires decisiveness and finality, cannot be held hostage to those who to use the phrase of Donaldson J in R v Aston University Senate, ex parte Roffey [1969] 2 QB 538 - 'sleep upon their rights'. But it seems to me that, once a challenge has been promptly raised, a refinement of that challenge by way of amendment, while it must always be justified, does not, if it avoids further delay, necessarily undermine good administration in the same fundamental manner.

  27. In response to the applicant's submission, Mr. Gordon QC, leading counsel for the Authority, did not base his opposition so much on actual prejudice or hardship. It was instead grounded in principle. The Authority's objection, he said, was a root and branch one. It was wrong for an applicant to be able to challenge a decision of a public authority on one set of grounds, to seek an adjournment and then employ that period of grace to actively seek further grounds. If conduct of this kind was to be condoned, public authorities would be wary of ever agreeing to adjournments for fear that they would thereby leave themselves exposed to a raft of new arguments. Even if it is a valid point that springs up late in the day, said Mr. Gordon, a good reason for the delay is nevertheless required and none has been given in this case. As I understood his submissions, Mr. Gordon argued that it was the essence of judicial review applications that they must not only be brought promptly but that the grounds of challenge must be identified promptly too. The public interest is not advanced if public authorities (and affected third parties) are kept in a state of suspense as to the true grounds of challenge.

  28. As a statement of broad principle, I take no issue with these submissions. It speaks for itself, I think, that a public authority should be entitled to know at the time when one of its decisions is challenged why exactly it is challenged. If not, it stands upon shifting sands in respect not only of that decision but (importantly) of others it may wish to make of a similar nature. In order to maintain the integrity of the judicial review process, the courts will, of course, view applications to amend made late in the day with circumspection. But occasions do arise when, on a considered reading, the grounds of a challenge need to be refined and that may happen well after proceedings have been commenced. It is not to be encouraged; indeed, it is to be vigorously policed, but the court must always look to the essential justice of the matter and, where applicable, the public interest.

  29. In the present case, while clearly the applicant was of the view that the May 2002 direction was unlawful and has at all times sought the most convincing grounds to prove it, there can be no suggestion that its original grounds of challenge were made for any sort of holding purpose or that the period of stay was sought, even in part, for the purely tactical purpose of improving its grounds of challenge. If I believed otherwise, my intended ruling would be different.

  30. Nor can it be said that the Authority has been taken by surprise by the application to amend or in any practical way prejudiced.

  31. In the present case the issue raised by the applicant is, as I have said, one of real importance, going as it does to the power of the Authority to require broadband type II interconnection pursuant to s.36B(1)(a)(iii) of the Ordinance. It is therefore, in my opinion, an issue that should be resolved now. The Authority will then know where he stands. That will assist good administration not hinder it.

  32. Accordingly, in the exercise of my discretion, I am of the view that the application to amend should be allowed.

  33. By way of postscript, if it is argued that the remedies sought by the applicant are no longer effective, I am satisfied that it is nevertheless appropriate for this Court to deal with the matter. In this regard, although it relates to an appeal and not a judicial review, I am of the view that the dictum of Lord Slynn in R v Secretary of State for the Home Department, ex parte Salem [1999] 1 AC 450, at 456, is, in principle, applicable:

    My Lords, I accept, as both counsel agree, that in a cause where there is an issue involving a public authority as to a question of public law, your Lordships have a discretion to hear the appeal, even if by the time the appeal reaches the House there is no longer a lis to be decided which will directly affect the rights and obligations of the parties inter se.

    THE APPLICATION FOR LEAVE

  34. In this jurisdiction, the test to be applied remains the one based on what Lord Diplock said in Inland Revenue Commissioners v National Federation of Self-Employed & Small Businesses Ltd [1982] AC 617, at 644:

    If, on a quick perusal of the material then available, the court thinks that it discloses what might on further consideration turn out to be an arguable case in favour of granting to the applicant the relief claimed, it ought, in the exercise of a judicial discretion, to give him leave to apply for that relief.

  35. It is not an onerous test. It is there to eliminate frivolous, vexatious or hopeless applications. Leave should only be denied if there is no prima facie arguable case.

  36. In the present case, even if I am wrong in the conclusions I have reached later in this judgment on the substantive issues, I do not believe it could be held that the applicant's application for leave was in any way frivolous, vexatious or hopeless or devoid of merit, at least as an arguable case. Accordingly, in so far as it is necessary to record my determination on the issue, I am satisfied leave should have been granted.

    DOES SECTION 36B(1)(a)(iii) EMPOWER THE AUTHORITY TO REQUIRE BROADBAND TYPE II INTERCONNECTION?

  37. The May 2002 direction was made by the Authority in terms of s.36B(1)(a)(iii) of the Ordinance. This is stated in the body of the direction itself.

  38. In so far as it is relevant, s.36B(1)(a)(iii) of the Ordinance is to the following effect:

    (1)

    Subject to subsection (2), the Authority may issue directions in writing -

    (a)

    to a licensee requiring it to take such action as the Authority considers necessary in order for the licensee to -

    ....

    (iii)

    in relation to any interconnection of the type mentioned in section 36A(3D), secure the connection of any telecommunications service being the subject of its licence to-

    (A)

    any other telecommunications service being the subject of a licence granted under this Ordinance or of an order made under section 39 ....

  39. It is undisputed that a requirement to secure a type I interconnection is caught by s.36B(1)(a)(iii) as it constitutes the connection of one telecommunications 'service' to another 'service'. But a broadband type II interconnection, it is said by the applicant, while it may involve the connection of equipment or the interconnection of part of one licence's system to another's, does not constitute the interconnection of one 'service' to another. Accordingly, it is not caught by the section.

  40. It is the Authority's case that, even though there may be no dispute as to the engineering requirements for broadband type II interconnection, and even though broadband type II interconnection may be different from type I interconnection, in terms of s.36B(1)(a)(iii) of the Ordinance broadband type II interconnection does incontestably constitute the connection of one 'service' to another 'service'.

    THE DIFFERING NATURES OF TYPE I AND BROADBAND TYPE II INTERCONNECTION

  41. Type I interconnection, as described to me, is a form of connection by way of 'bridges' or 'pipes' that link two rival networks, allowing the users of one network to communicate with the users of the other. Thus, type I interconnection allows users of network A to communicate with users of network B and vice versa. Networks A and B pass telecommunications back and forth between them through their respective gateways, those gateways being interconnected by the 'bridges' or 'pipes' to which I have referred. As Mr. Pannick explained it, a call originating on network A is 'handed off' to network B, to which the called party is a subscriber. Network A buys a 'call termination service' from network B which connects the call from the interconnection point to the called party.

  42. It is important to emphasise that with type I interconnection the two networks remain physically intact. Crucially, both continue to provide a full telecommunications service to their own subscribers. While type I interconnection gives network A access to network B and vice versa so that transmissions may flow between the two, it does not require either network to surrender any part of their telecommunications system to the other. I use the word 'surrender' to mean the diversion of a part of one network system to the other so that it is given over to the other for a lasting period of time: a week, a month, longer.

  43. However, broadband type II interconnection, as described to me, is very different. I say that because, after interconnection, the two networks do not remain physically intact. By this I mean that after interconnection the one network will have surrendered part of its telecommunications system to the other. I can best explain the nature of broadband type II interconnection by looking to what happens if the applicant makes a connection of that type with Wharf. In so doing, by way of illustration, I use a customer who (perhaps not uncommonly) has entered into a contract with Wharf to be supplied broadband services for his computer:

    1. The customer's computer will be plugged into a socket in his wall and that socket will be connected to copper wires which are contained within ducts. The copper wires will run from the customer's residence to a local telephone exchange where the wires from many different residences come together. That physical infrastructure running from the customer's wall socket into (and including) the local exchange is known as a 'local loop'

    2. The applicant owns, provides, maintains and operates the local loop ensuring that telecommunication transmissions can pass through it.

    3. In order to make a broadband type II interconnection, a technician must disconnect the copper wire from the applicant's equipment at the exchange. He must then connect the copper wire to equipment owned, provided, maintained and operated by Wharf, that equipment being 'co-located' at the exchange.

    4. After the interconnection has taken place, broadband transmissions (powered by electricity from a third party supplier of electricity) will run along the local loop, still maintained and operated by the applicant, but at the local exchange they are then diverted into Wharf's network. Unless (and until) the copper wires are reconnected to the applicant's equipment at the exchange, broadband transmissions are unable to run along the local loop and into the applicant's network.

    5. It is not therefore a case of a 'bridge' or 'pipe' being used to allow for mutual accessibility. The diversion of the wires to Wharf's equipment means that the applicant surrenders its ability to use the local loop to supply its services to the customer.

  44. In its amended Form 86A, the applicant described broadband type II interconnection in the following terms:

    The transfer involves the physical disconnection of the copper wires connecting the customer's device to the equipment of the applicant at the local exchange and reconnecting those wires to the equipment of Wharf at the same exchange. In order for this process to be effected Wharf has to install its equipment at the applicant's local exchange. This process is called 'co-location'. Type II interconnection is, therefore, not really interconnection at all. It is a mandated leasing of the local loop of the applicant to another licensee ....

    [my emphasis]

    In my view, the words that I have placed in emphasis are apt. The applicant may, of course, levy charges for making over the local loop to Wharf. But, as I have said, there is no mutual accessibility to the local loop. Only Wharf may now transmit broadband communications through it. Effectively, therefore, by the direction of the Authority, the applicant must lease part of its physical infrastructure to Wharf.

  45. For the Authority, Mr. Gordon emphasised that, in terms of the Ordinance, a telecommunications service utilises a network. The local loop, being part of the applicant's network, and being 'maintained' and 'operated' by it, is manifestly part of its service. That being the case, when interconnection takes place, one 'service' is linked to another 'service'.

  46. The local loop, said Mr. Gordon, was essential to the provision of a telecommunications operation; that was its purpose. Without it there would be no provision of a service. Immediately prior to interconnection it was part of the applicant's service, telecommunication transmissions being sent along it or being capable of being sent along it. It was, therefore, in terms of the Ordinance, part of the applicant's service.

  47. Leaving aside for the moment the meaning and intent of s.36B(1)(a)(iii) of the Ordinance, in looking to the Ordinance as a whole, I am satisfied that Mr. Gordon must be wrong in his submission. In my view, in maintaining a local loop; that is, in ensuring its serviceability, the applicant, while it may 'provide' a local loop, does not in any way 'operate' a telecommunications service in respect of it. As Mr. Pannick, for the applicant, emphasised, once broadband type II interconnection has taken place, the applicant, while it continues to own the physical material making up the local loop, does nothing, actively or passively, to 'operate' it. The applicant plays no role in sending any transmission along that loop. It does no more than maintain the local loop in the sense of maintaining any physical piece of equipment.

    THE STATUTORY DISTINCTION BETWEEN A TELECOMMUNICATIONS SERVICE AND THE PHYSICAL INFRASTRUCTURE REQUIRED TO FACILITATE THAT SERVICE

  48. In s.2 of the Ordinance, a 'telecommunications service' means 'a service for the carrying of communications by means of guided or unguided electromagnetic energy or both'. The 'service' is defined therefore by what is done; namely, the carrying of electronic communications from point A to point B. In context, this accords with the ordinary meaning of 'service'. The Oxford English Reference Dictionary (2nd Ed.) defines 'service' as 'the act of helping or doing work for another', the word including the meaning of 'work done in this way'.

  49. If a 'service' is defined in the Ordinance by what is done; that is, by the activity of carrying electronic communications for customers, I fail to see how broadband type II interconnection, which requires one licensee to surrender part of its system so that another licensee may be the sole provider of the activity in respect of that part of the system, can be described as the connection of two 'telecommunications services'.

  50. My opinion is not in any way altered by a consideration of the other relevant definitions contained in s.2 of the Ordinance. These definitions do not speak of any activity, they speak instead of physical objects, either alone or in some way linked to each other. In this regard, s.2 defines a 'telecommunications network' in purely physical terms as meaning 'a system, or series of systems, for carrying communications ....'. A 'telecommunications system' is then defined as meaning 'any telecommunications installation or series of installations, for the carrying of communication ....' A 'telecommunications installation', in its turn, means 'apparatus or equipment maintained for or in connection with a telecommunications network, telecommunications system or telecommunications service'.

  51. Section 36B(1)(a)(iii), of course, speaks of the Authority having the power to issue directions 'in relation to any interconnection of the type mentioned in s.36A(3D)'. The degree to which s.36A(3D) qualifies the meaning of s.36B(1)(a)(iii) may therefore be decisive and I will turn to that consideration shortly.

  52. But leaving s.36A(3D) aside for the moment and looking only to the degree to which the definitions contained in s.2 qualify the meaning of s.36B(1)(a)(iii), on the basis of those definitions I am satisfied that the connection of one telecommunications 'service' to another in terms of s.36B(1)(a)(iii) must incorporate the connection of two telecommunications operations, something more therefore than the connection of part of the physical infrastructure of one telecommunications network to another telecommunications network.

    THE SECTION 36A(3D) QUALIFICATION

  53. Section 36B(1)(a)(iii) is specific in limiting the power of the Authority to issuing directions in respect only of the connection of one telecommunications 'service' to another 'service'. Absent any qualification provided by the phrase 'in relation to any interconnection of the type mentioned in section 36A(3D)', I am satisfied that the section permits only the linking of one operation with another operation and does not permit what has been described as the mandated leasing of part of one licensee's physical network so that another licensee may provide a service on it.

  54. But what of the s.36A(3D) qualification? Does it act, within the context of s.36A and B of the Ordinance, to change the nature of a telecommunications 'service' as Mr. Gordon has advocated or is the section to be read as retaining the nature of a 'service' as defined in s.2 of the Ordinance?

  55. First, it must be noted that s.36A is a recent amendment to the Ordinance, being made in the year 2000. Section 36A gives the Authority the power to determine the terms and conditions of any interconnection provided it is an interconnection of the type detailed in s.s.3D of the section. In this regard, s.36A(1) reads:

    The Authority may determine the terms and conditions of interconnection of the type mentioned in subsection (3D).

  56. That the scope of s.36A is related to the power of the Authority to impose terms and conditions on any interconnection and not to direct the interconnection itself is illustrated by subsection (2) which reads:

    (2)

    The Authority may make a determination on the request of a party to the interconnection or, in the absence of a request, if he considers it is in the interest of the public to do so.

  57. The statutory power of the Authority to determine 'terms and conditions of interconnection' is restricted to the type of interconnection mentioned in s.36(3D). This subsection reads:

    The type of interconnection [in respect of which the Authority may impose terms and conditions] includes an arrangement among 2 or more parties for -

    (a)

    interconnection to and between telecommunications systems or services including -

    (i)

    those licensed under section 7, expressed as being licensed under section 7 or 34 or deemed licensed by the Chief Executive in Council under this Ordinance under section 8(3) of the Television Ordinance (Cap.52);

    (ii)

    those of a description mentioned in section 8(4)(e) and (f);

    (iii)

    telecommunications services that are the subject of an order made under section 39;

    (b)

    access to, or interconnection with, any element of a telecommunications network, system, installation or service on an unbundled basis at any point that is technically feasible;

    (c)

    the supply of a telecommunications service in connection with paragraph (a) or (b).

  58. The terminology employed in s.36A(3D) is subject to its own definitions. In this regard s.36A(3E) states that 'in this section'; that is, in s.36A -

    'element' means any cable, component, unit, equipment, hardware or software used to provide a telecommunications service and includes the facilities referred to in section 36AA;

    'interconnection' means any connection between systems or services or elements of systems or services for the delivery of any communication, message or signal over the connection and, without limiting the generality of the foregoing, includes interconnection to a system, to a service, between systems, between services and between a system and a service;

    'service' includes elements of a service;

    'system' includes elements of a system.

  59. Prior to amendment in 2000, s.36A(1) read:

    The Authority may, in relation to any interconnection of the type mentioned in subsection (3), determine that the terms and conditions of any agreement for that interconnection shall be.

    The old subsection (3) read:

    The type of interconnection referred to in subsection (1) is an arrangement among 2 or more than 2 parties for interconnection to-

    (a)

    and between telecommunication systems or services licensed under section 7 or, expressed as being licensed in exercise of the powers conferred by section 7 and 34 or, deemed to be licensed by the Governor in Council under this Ordinance by virtue of section 8(3) of the Television Ordinance (Cap.52); and

    (aa)

    and between programme services licensed by the Governor in Council under section 8 of the Television Ordinance (Cap.52); and

    (b)

    and between systems of the description mentioned in section 8(4)(e); and

    (c)

    and between closed circuit television systems of the description mentioned in section 8(4)(f); and

    (d)

    and between telecommunication services being the subject of an order made under section 39.

  60. The new s.36A(3D) is plainly wider than the old s.36A(3). In particular, s.36A(3D) now includes not only 'interconnection' with other 'systems or services' but, in terms of subsection(3D)(b), includes an arrangement among two or more licencees for 'access to' or 'interconnection with' any 'element of a telecommunications network system, installation or service'.

  61. In my judgment, in terms of s.36A(3D), interconnection between two telecommunications services must, on an ordinary reading, include what is described in subsection (3D)(b) as access to or interconnection with any element of a telecommunications service. The word element is not only stated in subsection (3D)(b) but in terms of s.36A(3E) a 'service' is defined as including an 'element' of a service. What then is an 'element'? Section 36A(3E) defines an 'element' as 'any cable, component, unit, equipment, hardware or software' used to provide a telecommunications service'. An element of a service is therefore, for the purposes of s.36A, defined in terms of physical infrastructure. Accordingly, as I read it, for the purposes of s.36A, the interconnection of two telecommunications services includes the interconnection of an element of one service with another service and that element may consist of a piece of physical infrastructure such as the copper cable that makes up a local loop.

  62. Mr. Pannick, for the applicant, accepted that the amendments made in 2000 to s.36A do enable the Authority, within the terms of that section, to determine terms and conditions that encompass the new technology of broadband. Quite clearly, he said, when broadband type II interconnection takes place, the new provider (for example, Wharf) gains 'access' to an 'element' of the applicant's network for the purposes of s.36A(3D)(b).

  63. The critical issue, however, is the degree to which, if at all, that definition of a 'service', which, in my view, has conflated the concepts of an operation and the hardware on which it is based, is carried over into s.36B(1)(a)(iii).

  64. Before moving to consider that issue, it is to be noted that s.36B(1)(a)(iii) was itself only subjected to a single amendment in the year 2000; that is, by the deletion of the phrase 'section 36A(3)' and the replacement of the phrase 'section 36A(3D)'.

  65. For the applicant, Mr. Pannick said that it was notable the limited degree to which s.36B(1)(a)(iii) has been amended when contrasted with the amendments to s.36A. Section 36B(1)(a)(iii) is drafted more narrowly than s.36A. Section 36A(1)(a)(iii) does not, as it could have done, incorporate a power to direct the connection of any 'network', 'system' or 'installation'. It continues to limit the power of the Authority to direct the connection only of two telecommunications 'services'.

  66. The reference in section 36B(1)(a)(iii) to 'connection' and 'service', submitted by Mr. Pannick, does not benefit from the expanded definition of 'element' or 'service' contained in section 36A(3E). That is because section 36A(3E) expressly applies only to 'this section', that is section 36A. It does not apply to section 36B. Section 36A(3E) does not say, as it could have done: "In this section and in section 36B".

  67. The fact that s.36B(1)(a)(iii) is thus limited is not surprising, said Mr. Pannick. Broadband type II interconnection, being a form of mandated leasing and not a means to ensure mutual accessability, constitutes a substantial interference with the property rights of an affected licensee. In the circumstances, a power under s.36B to direct interconnection is considerably more intrusive than a power under s.36A to set equitable terms and conditions in respect of a broad range of different interconnections which the parties themselves may already have agreed although unable to agree the terms.

  68. Although Mr. Gordon contested the assertion that the power under s.36B to direct a connection was more intrusive than the power under s.36A to determine terms and conditions, I agree with Mr. Pannick that the powers given to the Authority under s.36B are potentially more intrusive. In my view, the contrast between a power to set terms and conditions, having regard to a range of equitable factors, when the parties themselves have been given an opportunity to do so and have failed, and the power to direct that one licensee surrender part of its physical network to another is apparent.

  69. Mr. Pannick expanded upon his submissions by saying that it was not permissible therefore to read s.36A and B as being entirely complementary to each other. Section 36A gives the power to set terms and conditions. In that regard, the legislature has given broad scope to the Authority's powers. But it did not follow, absent clear language to that effect, that the same broad scope applies to the more intrusive power under s.36B.

  70. Section 36B(1)(a)(iii) remains clear in its language, said Mr. Pannick, in that the Authority only has the power to direct the connection of one 'service' to another 'service' and the word 'service' as used in the subsection must be construed according to s.2 of the Ordinance. That being the case, as to the true interpretation of s.36B(1)(a)(iii), Mr. Pannick said that is not enough that a direction must be in respect of an interconnection of a type mentioned in s.36A(3D), it must also be one that connects one service with another. Accordingly, for the Authority to act within his powers, he must ensure:

    1. that the interconnection he seeks is of a type mentioned in s.36A(3D) and, in addition,

    2. that it constitutes the connection of one telecommunications service with another service.

  71. Such an interpretation, said Mr. Pannick, would not involve stretching syntax nor would it in any way result in an absurdity. The legislature could sensibly decide not to compel a power to direct a broadband type II interconnection which impacts on private property rights but to allow a power to determine terms and conditions if licensees agree that an interconnection is necessary but cannot agree on its terms.

  72. The difficulty that I have with Mr. Pannick's interpretation of s.36B(1)(a)(iii) is that, as Mr. Gordon noted, it effectively renders superfluous the first part of the subsection; that is, the phrase 'in relation to any interconnection of the type mentioned in s.36A(3D)'. As Mr. Gordon put it: why have a condition precedent that any interconnection must be of a type mentioned in s.36A(3D) if it has no practical effect in determining what is or is not a 'service' for the purposes of the subsection?

  73. Mr. Pannick gave the riposte that if effect was given to that phrase it would render superfluous the second part of the subsection; that is, that any interconnection must be between one 'service' and another 'service'. But I do not see that adherence to the phrase 'in relation to any interconnection of the type mentioned in s.36A(3D)' renders the second part of the subsection otiose. In my judgment, what the phrase accomplishes is a change in the meaning of a 'service' from that understood in the rest of the Ordinance to the meaning clearly defined in s.36A(3D). For, as I see it, if the phrase 'in relation to any interconnection of the type mentioned in s.36A(3D)' is to have any effect it must be, as Mr. Gordon put it, that the Director is given the power in terms of s.36B(1)(a)(iii) to secure any interconnection of a kind defined in s.36A(3D). That would include the interconnection of a service or any element of a service, as defined in s.36A(3D), to another service.

  74. It was Mr. Pannick's submission that, if this was correct, it would mean that the two concepts of service and the hardware necessary to provide that service would have to be fused so that any distinction between them fell away. Any such conflation, he submitted, would fall foul of s.2 of the Ordinance and indeed the whole structure of the Ordinance as it now stands. In my judgment, however, it is clear that, in respect of s.36A and thereby 36B(1)(a)(iii), the legislature has conflated the two concepts of service and the hardware necessary to provide that service. It has chosen to do so in respect of those sections even though it has left the distinction between the two concepts unchanged elsewhere in the Ordinance: for example, in relation to s.7B(2) which reads:

    The Authority may create a class licence for telecommunications networks, systems, installations or service.

    [my emphasis]

  75. While a court may be unwilling to find two interpretations of one concept (that of a 'telecommunications service') within a single statute, I do not see that it is impermissible if the legislature has spelt out that intention.

  76. As Mr. Gordon emphasised, s.36A and B must be read as complementary to each other, as part of a clear design contained within the broader context of the Ordinance, that design also encompassing s.36C and D. Section 36B, said Mr. Gordon, enabled the Authority to make directions requiring licensees to comply with their licence conditions, including making connections to other licensed networks. Section 36A enabled the Authority to determine any necessary terms and conditions. Section 36C enabled the Authority to levy penalties for non-compliance while s.36D enabled the Authority to obtain information regarding suspected non-compliance. It follows, said Mr. Gordon, that, as part of the same scheme, s.36A and s.36B must be interpreted in a complementary manner, the workings of the one section being integral to the other. What must be adopted therefore is a method of interpretation that reconciles the two sections.

  77. During the course of his submissions, Mr. Gordon advocated a purposive interpretation of s.36B(1)(a)(iii), taking into account the rapidly developing technology in telecommunications which could not have been anticipated, at least in respect of specific advances, by the law makers. In this regard, he urged the court to adopt the interpretative method examined and adopted by the House of Lords in R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687. For reasons which I need not explore in depth, I do not consider this decision to be of assistance in the present case. In my view, the amendments made in the year 2000 specifically addressed advances in telecommunications technology, those advances, as Mr. Pannick himself acknowledged, including the advent of broadband. The amendments were not therefore drafted in ignorance of forthcoming scientific developments.

  78. Having said that, however, in seeking the intention of the legislature through the amended language of s.36A and B, I have borne in mind the observations of Learned Hand J, cited with approval in Quintavalle, in Cabell v Markham (1945) 148 F 2d 737, 739:

    Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.

  79. In my judgment, therefore, in looking to the legislative intent reflected in the language of the section, I am satisfied that s.36B(1)(a)(iii), as amended, must be read as permitting the Authority to direct the interconnection of broadband services as was done in the May 2002 direction.

  80. It is correct, of course, that the power of the Authority in terms of s.36B(1)(a)(iii) is potentially an intrusive power. That is why, in my view, the power is complemented by the Authority's power under s.36A to reduce any prejudice by setting equitable terms and conditions when, as in the present case, one licensee is directed to make over part of its physical infrastructure for use by another. That, of course, leads to the applicant's second challenge; namely, the alleged failure by the Authority, in making the May 2002 direction, to accompany it with any terms and conditions.

    DOES THE ABSENCE OF TERMS AND CONDITIONS RENDER THE MAY 2002 DIRECTION UNLAWFUL?

  81. It is the applicant's case that, in failing to set interim terms and conditions at the time he gave the May 2002 direction, the Authority acted outside of his statutory powers or, if acting within his powers, acted in a way that constituted an abuse of those powers or was irrational.

  82. Section 36B(1)(a)(iii) of the Ordinance, said Mr. Pannick, empowers the Authority to issue directions to a licensee requiring that licensee 'to take such action' as the Authority considers necessary in order to secure the connection of one telecommunications service with another.

  83. A licensee made the subject of a direction must obey that direction. A failure to do so renders a licensee liable in terms of s.36C of the Ordinance to penalties. The possible punishments laid down in s.36C are sanguine. What also had to be borne in mind, said Mr. Pannick, was that a direction made pursuant to s.36B to effect broadband connection, when it was made without setting terms, interim or otherwise, created a situation of unequal bargaining power between the licensee made subject to the direction and the licensee benefiting from that direction. The licensee made subject to the direction was obliged, upon pain of penalty, to effect interconnection while the licensee benefiting from the direction could continue to negotiate, pressing its advantage to secure the best terms for itself. In short, the licensee made subject to the direction had to surrender part of its physical infrastructure, while continuing to expend money to maintain it, while the licensee obtaining interconnection was under no practical restraint to an early agreement of fair and reasonable terms. As it was, said Mr. Pannick, the applicant did agree interim terms with Wharf. But that is not to the point. The terms were agreed because, as a result of the Authority's failure to set fair and reasonable terms, the applicant was placed in the position of having to concede matters which it would not otherwise have conceded. In this regard, Mr. Pannick made reference to the affirmation of 2 March 2004 of Mr. Peter Lam, Director of Wholesale Marketing and Sales of the applicant, in which it was said that the May 2002 direction forced the applicant to make concessions in respect of interim terms "under protest".

  84. As I understood it, it was Mr. Pannick's assertion that, given the consequences of non-compliance and the fact that a direction made without terms and conditions invariably created a position between commercial rivals of unequal bargaining power, it was to be inferred from the language of s.36B(1)(a)(iii) that, in giving a direction pursuant to that section, the Authority was obliged to set what he considered to be equitable terms governing the proper execution of the direction, whether those terms be interim or otherwise. Bearing in mind that terms and conditions covered technical as well as financial matters, how else was a licensee made the subject of a direction to know how it should 'take such action' as the Authority considered necessary?

  85. To impose obligations on a licensee to comply with a broadband type II interconnection without informing it of the terms and conditions which it must respect cannot be in accordance with law, said Mr. Pannick. It is a fundamental principle of public law that an individual should be able to know in advance of carrying out obligations pursuant to statutory or administrative powers what the legal consequences will be. It cannot have been the intention of the legislature that a licensee should be obliged, subject to sanction, to carry out a direction made pursuant to s.36B(1)(a)(iii) to effect broadband interconnection, thereby surrendering part of its physical infrastructure, without the Authority himself being under a duty to specify relevant terms and conditions pertaining to that connection.

  86. While I am sympathetic to the force of these arguments, I am unable to read s.36B(1)(a)(iii) as requiring the Authority, on each occasion that he makes a direction demanding interconnection, to set terms and conditions governing that direction. As Mr. Gordon submitted, s.36B(1)(a)(iii) gives to the Authority the power to issue directions to a licensee requiring it to take such action as the Authority 'considers necessary' in order for the licensee to secure a connection of one service to another. As I read it, the section gives a discretion to the Authority to decide in each instance what is or is not necessary. That, in my opinion, would be an entirely sensible interpretation of legislative intent. There may be occasions when terms and conditions are patently not required and others when they are. I am therefore of the view that s.36B(1)(a)(iii) does not contain a requirement that terms and conditions must always be specified. As I have said, the Ordinance directs that it rests in the discretion of the Authority.

  87. That discretion, of course, must, having regard to all the circumstances, be exercised reasonably and must not constitute an abuse of administrative power. In respect of broadband interconnection, bearing in mind that, for a licensee which is the subject of a direction, it involves the surrender of part of its network, and that, absent terms and conditions, even if only interim, it may act to the commercial prejudice of that licensee, it seems to me that the discretion must be exercised with these matters very much in mind. A public authority given the power to determine matters between competing commercial interests has a duty to balance those interests, ensuring, in so far as possible, that it does not become the champion of the interests of one party at the perceived cost of the other.

  88. In looking to these issues; that is, to whether the Authority's discretion was exercised lawfully, I go back briefly to 1999 to the time when the amendments to the Ordinance referred to earlier in this judgment were being proposed by the Executive. In advocating the proposals before the Bills Committee of the Legislative Assembly, the Deputy Secretary for Information Technology and Broadcasting was made aware of a concern that the Authority might seek 'arbitrarily' to change the basis for determination of such things as interconnection charges. In response, the Deputy Secretary is recorded in the minutes as saying that -

    The Bill only sought to clarify the powers of [the Authority] on interconnection, in particular the power to determine interconnection at any technically feasible point. The policy objective in this regard was that interconnection should be made at any technically feasible point on fair and reasonable terms if the interconnection was necessary to enable users of different networks to communicate with one another unobstructed.

    [my emphasis]

  89. The words of the Deputy Secretary, said Mr. Pannick, amounted to an assurance given by the Executive as to the circumstances or manner in which the Authority's powers under s.36A to set terms and conditions would be used; namely to ensure that interconnection, if necessary in the public interest, would be made on 'fair and reasonable terms'. That assurance, he said, must bind the Executive to set fair and reasonable terms when it is necessary to do so. In this regard Mr. Pannick looked to the dictum of Lord Steyn in R (Westminster City Council) v National Asylum Support Service [2002] 4 All ER 654, at 657[6]:

    If exceptionally there is found in explanatory notes a clear assurance by the executive to Parliament about the meaning of a clause, or the circumstances in which a power will or will not be used, that assurance may in principle be admitted against the executive in proceedings in which the executive places a contrary contention before a court.

  90. In the present case, said Mr. Pannick, the Authority was at all material times aware of the fact that the applicant was willing and able to provide broadband interconnection with Wharf and that the only issue upon which the parties were unable to agree was that of suitable terms and conditions. Accordingly, the single matter that required the Authority's determination was the setting of interim terms that the Authority considered fair and reasonable. That this was essential, said Mr. Pannick, was recognised by the Authority himself in the letter of 29 April 2002 (cited in paragraph 9 of this judgment) which, in part, reads:

    The 'Interim Terms' are necessary for stipulating the detailed interim arrangements to achieve an effective interconnection, in the absence of which the interconnection would be rendered impracticable or infeasible.

  91. The letter of 29 April 2002, said Mr. Pannick, recognised in the clearest of language that, in the prevailing circumstances, having regard to the failure of the applicant and Wharf to agree terms, the obligation rested on the Authority to set what he considered to be fair and reasonable interim terms that would bind the parties until a full determination as to equitable terms could be made pursuant to s.36A.

  92. Between the issue of that letter and the May 2002 direction, said Mr. Pannick, there was no change of circumstance or further agreement reached between applicant and Wharf which would justify the Authority's change of position. The Authority was aware that, while consensus may have been reached on technical issues, no formal agreement had been entered into covering relevant matters. Yet, in his May 2002 direction, the Authority declined to set interim terms and conditions.

  93. There was no lack of clarity as to why the Authority declined to do so, said Mr. Pannick. Two reasons were given in the covering letter to the direction (cited in paragraph 11 of this judgment). First, because of the existence of a 'Code of Practice and Technical Specifications' and, second, because terms and conditions could in any event be retrospectively applied. The Code and the Technical Specifications, submitted Mr. Pannick, did not address the issues in contention between the applicant and Wharf. As to the alleged power to impose terms retrospectively, if that power was contained in the Ordinance, which was denied, it was no answer. There was an obligation on the Authority, certainly in the circumstances of the present case, to set terms and conditions at the time of making the direction and not to consider doing so at some unspecified time in the future.

  94. It was Mr. Pannick's assertion that in the result the applicant was forced to effect interconnection and to do the best it could to agree terms with Wharf with a complete absence of certainty as to what the Authority's terms and conditions would eventually be or even when they would be set.

  95. As to the Authority's decision not to impose interim terms and conditions, it seems to me that he was entitled to take into account the fact that, even though a formal agreement had not been reached, the applicant and Wharf had nevertheless reached an understanding as to technical requirements. This understanding, guided, if necessary, by the published Code of Practice and Technical Specifications, provided what the Authority has termed 'a workable basis' for interconnection.

  96. In my judgment, however, it is in respect of the other terms and conditions that, in all the circumstances, and bearing in mind the deadlock reached between the applicant and Wharf, the Authority was obliged, in order to ensure fairness between the parties and through that to advance the public interest, to set interim terms and conditions at the time when the direction was made.

  97. The Authority has asserted that the absence of terms and conditions did not preclude the applicant and Wharf from reaching an agreement in respect of terms and conditions, even if the agreement was restricted to those that were essential. In my judgment, that ignores the fact that quite patently a failure to set interim terms and conditions, when agreement on them was the single issue outstanding between the parties, would place the applicant in a position in which, perhaps to a material degree, it would be burdened by what Mr. Pannick has described as unequal bargaining power. As the applicant's solicitors put it in their letter of 24 May 2002, it left the applicant in a position in which it was totally unclear as to the basis on which interconnection was to proceed.

  98. As I have indicated earlier, a public authority which must determine matters between commercial enterprises must act in recognition of commercial realities. Indeed it has a duty to act in recognition of these realities. Of course, it was possible for the applicant and Wharf to reach some sought of agreement and they did do so. However, as Mr. Pannick emphasised, the applicant had to do so from a position of disadvantage.

  99. It is not as if the Authority had no opportunity to look to appropriate terms and conditions. There had been ongoing correspondence and the position of both parties, it seems to me, could easily have been determined without undue delay.

  100. I reiterate that a public authority which must determine matters between competing commercial interests must balance those interests, ensuring that it does so in a neutral way while advancing the requirements of the statute from which it receives its powers.

  101. In my view, the fact that there was disagreement between the applicant and Wharf as commercial rivals was no reason to excuse the Authority washing his hands of the matter, ignoring commercial realities.

  102. In this regard, I bear in mind the assurance given by the Executive to the Bills Committee of the Legislative Assembly to set fair and reasonable terms when an interconnection was directed. The reasons for giving that assurance, especially when considered in the context of the present case, require no expansion.

  103. I also bear in mind the earlier recognition by the Authority himself that a failure to set interim terms would make effective interconnection 'infeasible' (i.e. impractical or impossible). I can find no rational ground upon which the Authority could execute the volte face which he executed in this instance. Indeed, it seems to me that this was one occasion when the Authority, having regard to the fact that deadlock on terms and conditions was the one matter outstanding, if it was to act fairly and not arbitrarily, was forced to 'grasp the nettle' and set interim terms and conditions rather than leave the parties, who had so far been unable to agree, to somehow reach some form of agreement.

  104. The Authority has asserted that in any event it would be able to determine terms and conditions in due course and to direct that they be applied with retrospective effect. But that, in my view, ignores the fact that in this case, perhaps for an indefinite period of time, the applicant, as it reasonably saw it, would have to labour under commercial disadvantage.

  105. For the reasons given, I am satisfied that the decision of the Authority not to set interim terms and conditions at the time when the May 2002 direction was made was an irrational decision, as that term is understood in public law. It was arbitrary and in my view constituted a failure to exercise powers given to the Authority under the Ordinance which demanded on this occasion to be exercised.

  106. In light of this, there is no need for me to determine the question of whether the Authority has the power to determine terms and conditions pursuant to s.36A of the Ordinance and to impose them with retrospective effect. However, as the issue was raised, I should say something briefly on the issue.

  107. There is, of course, a principle that, absent plain language or where the construction of a statute makes the intent clear, the courts should be slow to find that a statutory provision has retrospective effect. In this regard, in the House of Lords judgment in the case of L'Office Cherifien des phosphates v Yamashita-Shinnihon Steamship Co. Ltd [1994] 486 Lord Mustill set out the applicable principle:

    My Lords, my purpose in stressing this point is not to suggest that the courts below approached the question in a mechanistic way. Their careful judgments show that this was not the case. It is simply to explain why I do not find it necessary to cite and analyse the numerous authorities on retrospective effect, but prefer to proceed directly to the ascertainment of the intention which Parliament intended section 13A to achieve, by a reference to the following statement by Staughton L.J. in Secretary of State for Social Security v Tunnicliffe [1991] 2 All E.R. 712, 724, quoted by Sir Thomas Bingham M.R. in the present case, ante, p.495:

    In my judgment the true principle is that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matte of degree - the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended.

    Precisely how the single question of fairness will be answered in respect of a particular statute will depend on the interaction of several factors, each of them capable of varying from case to case. Thus, the degree to which the statute has retrospective effect is not a constant. Nor is the value of the rights which the statute affects, or the extent to which that value is diminished or extinguished by the retrospective effect of the statute. Again, the unfairness of adversely affecting the rights, and hence the degree of unlikelihood that this is what Parliament intended, will vary from case to case. So also will the clarity of the language used by Parliament, and the light shed on it by consideration of the circumstances in which the legislation was enacted. All these factors must be weighed together to provide a direct answer to the question whether the consequences of reading the statute with the suggested degree of retrospectivity are so unfair that the words used by Parliament cannot have been intended to mean what they might appear to say.

  108. For the Authority, Mr. Gordon submitted that the Ordinance did, on a full reading, permit the Authority to determine terms and conditions and to set them with retrospective effect. I am in agreement with that submission.

  109. I accept that there is no clear wording to this effect. Some reliance was placed by the Authority on s.36A(3C) which reads as follows:

    The terms and conditions in a determination -

    (a)

    are deemed to be of the essence of any agreement for the interconnection to which the determination is made unless the Authority otherwise directs for any particular term or condition.

    This section however does not seem to me to advance matters one way or the other.

  110. In my judgment, the intention of the legislature must be read by looking more broadly to s.36A and B. Section 36B empowers the Authority to direct interconnection. This is a jurisdiction given to the Authority to exercise in the public interest. It may be necessary, having regard to the speed of technological developments, to direct interconnection at what in all the circumstances is reasonably short notice. But, as I have earlier indicated, there is nothing in either section to suggest that the direction must be coupled with terms and conditions. To the contrary, in making a determination under s.36A in respect of terms and conditions the legislature, in order to ensure fairness, has laid out what must be recognised as a full process of consultation and consideration. A determination of terms and conditions therefore may be a lengthy process while interconnection made in terms of a direction issued pursuant to s.36B may be a reasonably short process.

  111. It follows, in my view, that if the Authority is to ensure fairness between a licensee who is required by a direction to give interconnection and a licensee who is to benefit from that interconnection, unless he is able to set interim terms and conditions then the purpose of the Ordinance will be undermined. But, as I see it, the setting of interim terms and conditions must imply the ability at a later stage to determine final terms and conditions and to ensure fairness by giving those terms retrospective effect. That may perhaps, as Mr. Pannick pointed out, create a degree of uncertainty but if, as he agrees, interim terms may be set, I do not see how any unfairness evident in those interim terms (occasioned perhaps by the speed required to determine them in the first instance) may be removed unless the Authority is able to determine final terms and conditions and to give them retrospective effect.

  112. In my judgment, therefore, it is implicit in the construction of the Ordinance that the legislature has given the power to the Authority to determine terms and conditions and to apply them with retrospective effect.

    THE CONSIDERATION OF AN APPROPRIATE REMEDY

  113. In exercising its supervisory jurisdiction this Court has two functions.

    • First, it must assess the legality of the actions of the Executive or of administrators tasked with public duties.

    • Second, if it finds unlawfulness, it must decide on an appropriate remedy.

    It is a basic principle that remedies are discretionary. As Hobhouse LJ said in Credit Suisse v Allerdale Borough Council [1997] QB 306, at 355D:

    The discretion of the court in deciding whether to grant any remedy is a wide one. It can take into account many considerations, including the needs of good administration, delay, the effect on third parties, the utility of granting the relevant remedy. The discretion can be exercised so as partially to uphold and partially quash the relevant administrative decision or act ....

  114. In the present case, while I have found that the May 2002 direction was unlawful, I confess to being troubled as to the determination of an appropriate remedy.

  115. The direction which has been the subject of this judgment was made more than two years ago. The applicant, I am informed, duly complied with the direction and, whether under protest or not, has managed to cobble together a set of terms and conditions with Wharf. I presume that that state of affairs prevails. Or it may even be that the Authority has now made a formal determination of suitable terms and conditions, whether challenged or not.

  116. Of central importance, I presume that any order made by myself may effect many members of the public. The importance of telecommunications, including broadband, need not to be stated. It is integral to our business and private lives.

  117. In all the circumstances, therefore, I am not inclined to state any remedy until I have had the benefit of submissions from the parties.

  118. I am not sure the degree to which the making of submissions (if the parties themselves are unable to agree an appropriate remedy pursuant to my findings) will involve complex issues or may perhaps be disposed of in a short hearing. I will therefore leave it to the parties to agree the best way forward. Any hearing must, of course, be on an expedited basis.

  119. In the circumstances, I consider it appropriate to reserve the question of costs. If the Authority is of the view that an order, other than the usual order that costs follow the event, should be made, I am prepared to hear submissions in that regard too.


Cases

R v Secretary of State for the Home Department, ex parte Ruddock [1987] 1 WLR 1482; R v Aston University Senate, ex parte Roffey [1969] 2 QB 538; Inland Revenue Commissioners v National Federation of Self-Employed & Small Businesses Ltd [1982] AC 617; R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687; Cabell v Markham (1945) 148 F 2d 737; R (Westminster City Council) v National Asylum Support Service [2002] 4 All ER 654; L'Office Cherifien des phosphates v Yamashita-Shinnihon Steamship Co. Ltd [1994] 486; Credit Suisse v Allerdale Borough Council [1997] QB 306

Legislations

Telecommunications Ordinance, Cap.106: s.2, s.36A, s.36B, s.36C, s.36D

Authors and other references

Oxford English Reference Dictionary (2nd Ed.) 

Representations

Mr. David Pannick, QC leading Mr. Roger Beresford, instructed by Messrs Richards Butler, for the Applicant

Mr. Richard Gordon, QC, Ms Teresa Cheng, SC leading Mr. Douglas Lam, instructed by Department of Justice, for the Respondent


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